Andylusion
Platinum Member
Of all the problems with America's banking system, OP mentions those?
How about we take away the casino aspect of our deposit institutions? I'd prefer a highly regulated deposit banking system like Canada and a robust commercial finance industry that gets the tougher deals done.
I'm confused by that statement. You want a highly regulated deposit banking system like Canada?
The banking system in Canada is by every possible measure, less regulated.
They have lower capitalization requirements. Lower LTV ratios. Lower over all regulation. Lower oversight.
And they have less 'consumer protection' policies in Canada. For example, if you take out loans, there is no bankruptcy. You can't file bankruptcy. You have to pay it back. Period. You must pay back those loans. There is no file chapter 7, and walk away. You can't wipe out your credit card debt.
If the Canadian banks were subjected to American Banking laws, they would all be closed.
Let me just give you one example:
This is capital reserves. The amount of reserve capital banks hold, compared to the total value of the loan. US banks are required to have tons of capital, relative to the value of the loan. 5.5% to 8.5%.
Now look at the Canadian banks. Most of them do not even hold 1% capital compared to the value of the loan.
Canadian banks are far far far less regulated than US banks. Which is exactly why they don't fail. During the Great Depression in the 1930s, Canadian banks didn't have half the regulation of US banks, and didn't have any major bank failures.
Similarly, in 2008, they didn't have nearly as many bank failures as we did.
Regulation does not result in safety and stability. It in fact, is the very cause of instability and crashes.